Neuland Labs hits 20% upper circuit after solid Q2; stock at 10-month high

The company reported a record EBITDA margin of 23.6 per cent, led by shift in business mix towards higher margin products as well as various cost optimization initiatives.

Shares of Neuland Laboratories surged 20 per cent upper circuit to hit 10-month high of Rs 1,701.80 apiece in Thursday’s intra-day trade, in an otherwise weak market. The spike comes after the company reported record earnings before interest, taxes, depreciation, and amortization (EBITDA) margin of 23.6 per cent in the July-September quarter (Q2FY23).

For Q2FY23, margins, too, improved by 690 bps year-on-year (YoY), due to shift in business mix towards higher margin products as well as various cost optimization initiatives.

That apart, the company’s profit after tax jumped 88.6 per cent YoY to Rs 38.30 crore in Q2FY23, on the back of record quarterly revenue of Rs 294 crore, up 13.9 per cent YoY, powered by specialty and CMS vertical.

"The growth in specialty business was driven by products in pipeline, where customers prepared for the launch. The key products were Paliperidone, Ezetimibe, Donepezil and Apixaban. CMS business, meanwhile, was driven by product in development and a commercial molecule," the company said.

Besides, the management expects this structural shift to deliver greater operating leverage over long term. The CMS business continues to add projects of greater significance, thereby, leading to better long-term visibility. Overall, the management foresees a promising future for both the GDS and CMS businesses, backed by focus on execution excellence.

Neuland Labs has developed more than 300 processes and 75 APIs. The company has filed over 900 regulatory filings in the US (62 active US DMFs), the European Union (EU) and other geographies. The company's manufacturing facilities are inspected and approved by the USFDA and other leading regulatory agencies.

Currently, shares of Neulands Labs traded at its highest level since January 2022. In comparison, the S&P BSE Sensex was down nearly 1 per cent at 60,431 points at 02:23 pm. The stock had hit a 52-week high of Rs 1,875 on December 3, 2021.